November 2012|bsi|

In recent years there has been a flurry of engrossing research that uses political economy approaches to understand Public Financial Management (PFM) reforms in developing countries (or, frequently, the lack thereof). Some examples include the World Bank’s political economy of policy reform and Mike Steven’s institutional and incentive issues in PFM reform. This research has clearly struck a chord with frustrated technical assistants and policy advisors concerned about the slow pace of policy reform. And development agencies, eager to find a way to make these insights operationally relevant, have been quick to embrace political economy analysis (PEA). Likewise, organisations such as the World Bank and DFID argue that greater awareness of political economy contexts can improve aid project design and implementation and therefore frequently offer their staff handbooks, frameworks, training and analytical tools aimed to improve their ability to operate with greater political economy sensibility (See GSDRC for a good one-stop-shop to PEA resources).

In this (new) political economy narrative failed public sector reform programmes (of which there are many) are given as examples of technocratic advice offered blindly without cognizance of the political realities. The World Bank’s public sector reform evaluation reminds us to recognise the political nature of such reforms; while DFID’s how to note explains that governance agendas cannot be advanced through ‘technical solutions alone’. This guidance suggests that if only proper stakeholder analysis was conducted, the right windows of opportunity exploited, and coalitions for change were successfully mobilized, the project success rate would improve. Implicit in the political economy narrative is the assumption that technical specialists – be it in public financial management, health or education – will design and implement more effective development projects if they learn to diagnose and predict political motives. PEA handbooks and workshops teach development agency staff about forming coalitions for change, building demand for reform and identifying timeframes for doing business.

While this may well be sound advice, it misses the point. As somebody who has been engaged on the technocratic side of PFM and economic reforms I thought I’d let you in on a little secret: most PFM specialists, most aid technocrats for that matter, are fully aware that politics matters.  We might quibble about exactly how much technocratic advice matters, but few would disagree that politics is the overriding factor that determines the success of any public sector reform effort. A concern for the economic integrity of a policy proposal should not be confused with lack of political awareness. Just as we may like to critique the economic merits of the latest healthcare reform or tax rebate, ultimately we recognise that politicians are constrained in the space they have to manoeuvre, and that the way to affect change is by winning others over to our cause, not simply by being ‘right’.

Technical advisors often underperform in this realm not because they are unaware of political interests, but because they lack the skills and attributes that distinguish a good politician or manager. These may include communication and negotiation skills, an appetite for risk and leadership. However, while it might be possible to train staff in such areas, is this really the appropriate solution to the problem of politically unsophisticated approaches?

I see two dangers in the current rise in interest in political economy among public sector specialists:

By codifying political economy techniques we may begin to forget that politics is more art than science. There is a danger that the growing interest in PEA among technical advisors risks giving the false impression that politics itself can be approached as a technical problem. Economists’ attempts to model political behaviour send the message that by rejigging our models so that they factor in a previously missing political variable, we will be able to deliver the definitive policy answer. Ironically, political economy analysis frameworks and good practice notes are largely developed by economists and academics, not by politicians who actually operate successfully within a political space.

A division of labour between politicians and technocrats need not be a bad thing. The most important feature of technical advice is that it is technically sound. In industrialized countries, governments employ technical advisors to devise and propose policy solutions to a variety of public sector problems. Politicians listen and choose whether to adopt or ignore this advice.

However, to appear politically neutral and technically focused, development organisations often employ technocrats in managerial positions. But development organisations should strive for a better division of labour. As in industrialised countries, technocrats should advise on possible solutions while managers or politicians make decisions on how and/or whether to apply their advice. Furthermore, asking technical advisors to behave more like politicians may inadvertently pre-empt creative solutions. This may result in ideas thrown out pre-maturely because they are deemed politically unfeasible. We shouldn’t be so quick to dispense with the creative tension between technocrats and politicians.

Political economy analysis certain has its merits and offers many beneficial insights for the development community. Not least, it has begun to inject a healthy dose of realism into the debates about what aid-driven governance reform agendas can achieve, as illustrated by the work of the African Power and Politics Programme at ODI.  A better understanding and acceptance of the limitations to external support would serve the industry well.

However, in order to improve the political acumen of development organisations operating in developing countries, it seems highly inefficient to train technocrats to think and act more like politicians. Better to accept that some people are better placed in an advisory role where they are tasked with analysing and working out solutions to problems, while others are more adept at reading contexts, negotiating, and communicating. Instead of teaching specialists how to think like politicians, why not directly hire staff for their ‘political’ competencies?

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